Report Names Top Regions for Entrepreneurship

April 27, 2005--The top regions for entrepreneurship in the U.S are in the "non-California" regions of the western part of the country, with Colorado scoring the highest for innovation and entrepreneurship, according to research sponsored by the Small Business Administration's (SBA) Office of Advocacy and the Edward Lowe Foundation.

Fort Collins, Colo; Raleigh, N.C.; Provo, Utah; Austin, Texas; and Boston, Mass., are the top five most innovative-entrepreneurial regions in the U.S., according to the Innovation-Entrepreneurship NEXUS: A National Assessment of Entrepreneurship and Regional Economic Growth and Development report, which measured innovation and entrepreneurship for 394 labor market areas across the U.S.

The average number of new firm births per 1,000 labor force participants was greatest in Glenwood Springs, Colo., which averaged 9.2 new firm births annually from 1990 to 2001, the period covered in the report. Mansfield, Ohio, ranked the lowest, with an average of 2.0.

Provo, Utah, had the largest number of fast-growing firms at 8%, while Springfield, Mass., saw the greatest improvement in terms of generating new start-ups, with an 11.7% annual rate of change.

According to the report, the most entrepreneurial regions were associated with higher levels of technology and tended to move away from manufacturing as an economic base. The most entrepreneurial regions spent nearly 54% more on research and development, recorded 67% more patents per labor force participant, and had a 63% higher percentage of high tech establishments than the least entrepreneurial regions. The most and least entrepreneurial regions had 12.3% and 18.5% of their employment in manufacturing respectively, versus 31.5% and 28.5% in services.

A more educated population seems to make a significant difference to the entrepreneurial climate of a region, as well. More than 19% of the labor force participants in the most entrepreneurial regions held college degrees, compared to just 13.7% for the least entrepreneurial regions.

On an economic level, the most entrepreneurial regions enjoyed better local economies from 1990-2001. Employment growth was 125% higher than the least entrepreneurial regions, wage growth increased 58%, and productivity was 109% higher. Though the increases were most obvious in large regions, small and medium-sized regions enjoyed similar growth.

"Entrepreneurship is not the exclusive domain of large resource-rich communities," noted S. Michael Camp of Advanced Research Technologies LLC, in the report. "In fact, entrepreneurs are active in regions of all sizes, regardless of the capacity of the local development asset base. As such, regional developers should incorporate strategies for entrepreneurship development into their overall approach to economic growth."